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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended 31 December 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 001-04534
airproductslogoa16.jpg
AIR PRODUCTS AND CHEMICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware23-1274455
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1940 Air Products Boulevard
Allentown, Pennsylvania 18106-5500
(Address of principal executive offices and Zip Code)
610-481-4911
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1.00 per shareAPDNew York Stock Exchange
1.000% Euro Notes due 2025APD25New York Stock Exchange
0.500% Euro Notes due 2028APD28New York Stock Exchange
0.800% Euro Notes due 2032APD32New York Stock Exchange
4.000% Euro Notes due 2035APD35New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 
The number of shares of common stock, par value $1 per share, outstanding at 31 December 2023 was 222,301,051.


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AIR PRODUCTS AND CHEMICALS, INC. and Subsidiaries
QUARTERLY REPORT ON FORM 10-Q
For the quarterly period ended 31 December 2023

TABLE OF CONTENTS
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Table of Contents
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts and can generally be identified by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” "future," “goal,” “intend,” “may,” “outlook,” “plan,” “positioned,” “possible,” “potential,” “project,” “should,” “target,” “will,” “would,” and similar expressions or variations thereof, or the negative thereof, but these terms are not the exclusive means of identifying such statements. Forward-looking statements are based on management’s expectations and assumptions as of the date of this report and are not guarantees of future performance. You are cautioned not to place undue reliance on our forward-looking statements.
Forward-looking statements may relate to a number of matters, including expectations regarding revenue, margins, expenses, earnings, tax provisions, cash flows, pension obligations, share repurchases or other statements regarding economic conditions or our business outlook; statements regarding capital expenditures and plans, projects, strategies and objectives for our future operations, including our ability to win new projects and execute the projects in our backlog; and statements regarding our expectations with respect to pending legal claims or disputes. While forward-looking statements are made in good faith and based on assumptions, expectations and projections that management believes are reasonable based on currently available information, actual performance and financial results may differ materially from projections and estimates expressed in the forward-looking statements because of many factors, including, without limitation:
changes in global or regional economic conditions, inflation, and supply and demand dynamics in the market segments we serve, including demand for technologies and projects to limit the impact of global climate change;
changes in the financial markets that may affect the availability and terms on which we may obtain financing;
the ability to implement price increases to offset cost increases;
disruptions to our supply chain and related distribution delays and cost increases;
risks associated with having extensive international operations, including political risks, risks associated with unanticipated government actions and risks of investing in developing markets;
project delays, scope changes, cost escalations, contract terminations, customer cancellations, or postponement of projects and sales;
our ability to safely develop, operate, and manage costs of large-scale and technically complex projects;
the future financial and operating performance of major customers, joint ventures, and equity affiliates;
our ability to develop, implement, and operate new technologies and to market products produced utilizing new technologies;
our ability to execute the projects in our backlog and refresh our pipeline of new projects;
tariffs, economic sanctions and regulatory activities in jurisdictions in which we and our affiliates and joint ventures operate;
the impact of environmental, tax, safety, or other legislation, as well as regulations and other public policy initiatives affecting our business and the business of our affiliates and related compliance requirements, including legislation, regulations, or policies intended to address global climate change;
changes in tax rates and other changes in tax law;
safety incidents relating to our operations;
the timing, impact, and other uncertainties relating to acquisitions and divestitures, including our ability to integrate acquisitions and separate divested businesses, respectively;
risks relating to cybersecurity incidents, including risks from the interruption, failure or compromise of our information systems or those of our business partners or service providers;
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FORWARD-LOOKING STATEMENTS (CONTINUED)
catastrophic events, such as natural disasters and extreme weather events, pandemics and other public health crises, acts of war, including Russia’s invasion of Ukraine and new and ongoing conflicts in the Middle East, or terrorism;
the impact on our business and customers of price fluctuations in oil and natural gas and disruptions in markets and the economy due to oil and natural gas price volatility;
costs and outcomes of legal or regulatory proceedings and investigations;
asset impairments due to economic conditions or specific events;
significant fluctuations in inflation, interest rates, and foreign currency exchange rates from those currently anticipated;
damage to facilities, pipelines or delivery systems, including those we are constructing or that we own or operate for third parties;
availability and cost of electric power, natural gas, and other raw materials; and
the success of productivity and operational improvement programs.
In addition to the foregoing factors, forward-looking statements contained herein are qualified with respect to the risks disclosed elsewhere in this document, including in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 3, Quantitative and Qualitative Disclosures About Market Risk, as well as with respect to the risks described in Item 1A, Risk Factors, to our Annual Report on Form 10-K for the fiscal year ended 30 September 2023. Any of these factors, as well as those not currently anticipated by management, could cause our results of operations, financial condition or liquidity to differ materially from what is expressed or implied by any forward-looking statement. Except as required by law, we disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect any change in assumptions, beliefs, or expectations or any change in events, conditions, or circumstances upon which any such forward-looking statements are based.

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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements

Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three Months Ended
31 December
(Millions of U.S. Dollars, except for share and per share data)20232022
Sales$2,997.4 $3,174.7 
Cost of sales2,067.2 2,272.3 
Selling and administrative expense238.4 234.4 
Research and development expense25.7 24.4 
Other income (expense), net0.8 8.4 
Operating Income666.9 652.0 
Equity affiliates' income158.4 110.0 
Interest expense53.5 41.2 
Other non-operating income (expense), net(14.8)(0.6)
Income Before Taxes757.0 720.2 
Income tax provision135.4 136.4 
Net Income621.6 583.8 
Net income attributable to noncontrolling interests12.3 11.6 
Net Income Attributable to Air Products$609.3 $572.2 
Per Share Data (U.S. Dollars per share)
Basic earnings per share attributable to Air Products$2.74 $2.58 
Diluted earnings per share attributable to Air Products$2.73 $2.57 
Weighted Average Common Shares (in millions)
Basic222.5 222.2 
Diluted222.8 222.6 
The accompanying notes are an integral part of these statements.
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Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED COMPREHENSIVE INCOME STATEMENTS
(Unaudited)
Three Months Ended
31 December
(Millions of U.S. Dollars)20232022
Net Income$621.6 $583.8 
Other Comprehensive Income, net of tax:
Translation adjustments, net of tax of ($29.8) and ($38.0)
380.6 509.6 
Net (loss) gain on derivatives, net of tax of $5.5 and $38.2
(161.1)121.0 
Pension and postretirement benefits, net of tax of $ and $2.4
 6.7 
Reclassification adjustments:
Derivatives, net of tax of ($12.8) and ($21.7)
(42.2)(68.7)
Pension and postretirement benefits, net of tax of $4.2 and $3.7
13.7 11.9 
Total Other Comprehensive Income191.0 580.5 
Comprehensive Income$812.6 $1,164.3 
Net Income Attributable to Noncontrolling Interests12.3 11.6 
Other Comprehensive (Loss) Income Attributable to Noncontrolling Interests(138.1)12.7 
Comprehensive Income Attributable to Air Products$938.4 $1,140.0 
The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
31 December30 September
(Millions of U.S. Dollars, except for share and per share data)20232023
Assets
Current Assets
Cash and cash items$1,962.6 $1,617.0 
Short-term investments271.8 332.2 
Trade receivables, net1,725.4 1,700.4 
Inventories709.3 651.8 
Prepaid expenses206.8 177.0 
Other receivables and current assets773.6 722.1 
Total Current Assets5,649.5 5,200.5 
Investment in net assets of and advances to equity affiliates4,685.2 4,617.8 
Plant and equipment, at cost34,793.9 32,746.3 
Less: accumulated depreciation15,858.4 15,274.2 
Plant and equipment, net18,935.5 17,472.1 
Goodwill, net899.4 861.7 
Intangible assets, net339.1 334.6 
Operating lease right-of-use assets, net978.8 974.0 
Noncurrent lease receivables485.9 494.7 
Financing receivables1,119.1 817.2 
Other noncurrent assets1,025.7 1,229.9 
Total Noncurrent Assets28,468.7 26,802.0 
Total Assets(A)
$34,118.2 $32,002.5 
Liabilities and Equity  
Current Liabilities
Payables and accrued liabilities$2,717.9 $2,890.1 
Accrued income taxes166.9 131.2 
Short-term borrowings16.4 259.5 
Current portion of long-term debt218.0 615.0 
Total Current Liabilities3,119.2 3,895.8 
Long-term debt11,715.4 9,280.6 
Long-term debt – related party157.9 150.7 
Noncurrent operating lease liabilities635.1 631.1 
Other noncurrent liabilities1,111.5 1,118.0 
Deferred income taxes1,250.0 1,266.0 
Total Noncurrent Liabilities14,869.9 12,446.4 
Total Liabilities(A)
17,989.1 16,342.2 
Commitments and Contingencies - See Note 10
Air Products Shareholders’ Equity
Common stock (par value $1 per share; issued 2024 and 2023 - 249,455,584 shares)
249.4 249.4 
Capital in excess of par value1,200.0 1,190.5 
Retained earnings17,510.0 17,289.7 
Accumulated other comprehensive loss(2,120.3)(2,449.4)
Treasury stock, at cost (2024 - 27,154,533 shares; 2023 - 27,255,739 shares)
(1,966.1)(1,967.3)
Total Air Products Shareholders’ Equity14,873.0 14,312.9 
Noncontrolling Interests(A)
1,256.1 1,347.4 
Total Equity16,129.1 15,660.3 
Total Liabilities and Equity$34,118.2 $32,002.5 
(A)Includes balances associated with a consolidated variable interest entity ("VIE"), including amounts reflected in "Total Assets" that can only be used to settle obligations of the VIE of $2,751.8 and $2,256.8 as of 31 December 2023 and 30 September 2023, respectively, as well as liabilities of the VIE reflected within "Total Liabilities" for which creditors do not have recourse to the general credit of Air Products of $2,166.1 and $1,461.1 as of 31 December 2023 and 30 September 2023, respectively. Refer to Note 3, Variable Interest Entities, for additional information regarding the NEOM Green Hydrogen Company joint venture.
The accompanying notes are an integral part of these statements.
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Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
 31 December
(Millions of U.S. Dollars)20232022
Operating Activities
Net income$621.6 $583.8 
Less: Net income attributable to noncontrolling interests12.3 11.6 
Net income attributable to Air Products$609.3 $572.2 
Adjustments to reconcile income to cash provided by operating activities:
Depreciation and amortization349.2 321.5 
Deferred income taxes13.5 13.8 
(Undistributed) distributed earnings of equity method investments
(41.5)17.2 
Gain on sale of assets and investments(1.4)(2.3)
Share-based compensation13.8 16.1 
Noncurrent lease receivables20.0 19.4 
Other adjustments33.3 99.0 
Working capital changes that provided (used) cash, excluding effects of acquisitions:
Trade receivables11.8 40.4 
Inventories(48.6)(102.8)
Other receivables(64.5)(6.7)
Payables and accrued liabilities(268.5)(257.6)
Other working capital0.2 (10.9)
Cash Provided by Operating Activities$626.6 $719.3 
Investing Activities
Additions to plant and equipment, including long-term deposits(1,445.5)(834.2)
Investment in financing receivables(301.8) 
Proceeds from sale of assets and investments4.2 4.0 
Purchases of investments(55.5)(19.2)
Proceeds from investments120.1 591.5 
Other investing activities12.9 1.7 
Cash Used For Investing Activities($1,665.6)($256.2)
Financing Activities
Long-term debt proceeds810.4 476.3 
Payments on long-term debt(54.8)(195.9)
Net increase (decrease) in commercial paper and short-term borrowings1,020.9 (4.1)
Dividends paid to shareholders(388.9)(359.4)
Proceeds from stock option exercises 5.3 14.0 
Investments by noncontrolling interests34.5  
Other financing activities(64.6)(16.5)
Cash Provided by (Used for) Financing Activities$1,362.8 ($85.6)
Effect of Exchange Rate Changes on Cash21.8 42.5 
Increase in cash and cash items345.6 420.0 
Cash and cash items – Beginning of year1,617.0 2,711.0 
Cash and Cash Items – End of Period$1,962.6 $3,131.0 
The accompanying notes are an integral part of these statements.
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Air Products and Chemicals, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)

Three Months Ended 31 December 2023
(Millions of U.S. Dollars, except for per share data)Common
 Stock
Capital in
 Excess of
 Par Value
Retained
 Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
 Stock
Air
Products
Shareholders'
Equity
Non-
controlling
Interests
Total
Equity
Balance at 30 September 2023$249.4 $1,190.5 $17,289.7 ($2,449.4)($1,967.3)$14,312.9 $1,347.4 $15,660.3 
Net income— — 609.3 — — 609.3 12.3 621.6 
Other comprehensive income— — — 329.1 — 329.1 (138.1)191.0 
Dividends on common stock (per share $1.75)
— — (389.0)— — (389.0)— (389.0)
Share-based compensation— 13.8 — — — 13.8 — 13.8 
Issuance of treasury shares for stock option and award plans— (4.4)— — 1.2 (3.2)— (3.2)
Investments by noncontrolling interests
— — — — — — 34.5 34.5 
Other equity transactions
— 0.1  — — 0.1  0.1 
Balance at 31 December 2023$249.4 $1,200.0 $17,510.0 ($2,120.3)($1,966.1)$14,873.0 $1,256.1 $16,129.1 

Three Months Ended 31 December 2022
(Millions of U.S. Dollars, except for per share data)Common
 Stock
Capital in
 Excess of
 Par Value
Retained
 Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury
 Stock
Air
Products
Shareholders'
Equity
Non-
controlling
Interests
Total
Equity
Balance at 30 September 2022$249.4 $1,141.4 $16,520.3 ($2,786.1)($1,981.0)$13,144.0 $558.4 $13,702.4 
Net income— — 572.2 — — 572.2 11.6 583.8 
Other comprehensive income (loss)— — — 567.8 — 567.8 12.7 580.5 
Dividends on common stock (per share $1.62)
— — (359.8)— — (359.8)— (359.8)
Dividends to noncontrolling interests— — — — — — (0.8)(0.8)
Share-based compensation— 14.2 — — — 14.2 — 14.2 
Issuance of treasury shares for stock option and award plans— (7.4)— — 5.8 (1.6)— (1.6)
Other equity transactions— 0.2 (1.3)— — (1.1)(0.2)(1.3)
Balance at 31 December 2022$249.4 $1,148.4 $16,731.4 ($2,218.3)($1,975.2)$13,935.7 $581.7 $14,517.4 
The accompanying notes are an integral part of these statements.

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Air Products and Chemicals, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Millions of U.S. Dollars, unless otherwise indicated

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
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1. BASIS OF PRESENTATION AND MAJOR ACCOUNTING POLICIES
As used in this report, unless the context indicates otherwise, the terms “we,” “our,” “us,” the “Company,” "Air Products," or “registrant” include our controlled subsidiaries and affiliates.
Basis of Presentation
The interim consolidated financial statements of Air Products and Chemicals, Inc. and its subsidiaries included herein have been prepared by us, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations. In our opinion, the accompanying statements reflect adjustments necessary to fairly present the financial position, results of operations, and cash flows for those periods indicated and contain adequate disclosures to make the information presented not misleading. Adjustments included herein are of a normal, recurring nature unless otherwise disclosed in the notes to the interim consolidated financial statements.
To fully understand the basis of presentation, the interim consolidated financial statements and related notes included herein should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended 30 September 2023 (the "2023 Form 10-K"), which was filed with the SEC on 16 November 2023. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year.
Major Accounting Policies
Refer to our 2023 Form 10-K for a description of major accounting policies. There have been no significant changes to these accounting policies during the first three months of fiscal year 2024.

2. NEW ACCOUNTING GUIDANCE
New Accounting Guidance to be Implemented
Reportable Segment Disclosures
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". The update includes enhanced disclosures about significant segment expenses and identification of the chief operating decision maker. The update will be effective in our Annual Report on Form 10-K for the fiscal year ending 30 September 2025 as well as interim periods thereafter, although early adoption is permitted. The amendments must be applied retrospectively to all prior periods presented. We are evaluating the impact this update will have on our disclosures.
Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740)—Improvements to Income Tax Disclosures” to expand income tax disclosures, primarily through disaggregation requirements for the rate reconciliation and income taxes paid. The update will be effective in our Annual Report on Form 10-K for the fiscal year ending 30 September 2026, although early adoption is permitted. The amendments should be applied on a prospective basis with a retrospective option. We are evaluating the impact this update will have on our disclosures.
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3. VARIABLE INTEREST ENTITIES
We are the primary beneficiary of the NEOM Green Hydrogen Company joint venture ("NGHC"), which is a variable interest entity ("VIE") that is consolidated in our Middle East and India segment. We are not the primary beneficiary of any other material VIEs. We account for a VIE for which we have an equity interest and exercise significant influence but are not the primary beneficiary, such as the Jazan Integrated Gasification and Power Company joint venture ("JIGPC"), as an equity method investment. During the first quarter of fiscal year 2024, we determined that World Energy, LLC ("World Energy") is a VIE for which we have no equity interest and are not the primary beneficiary. Our variable interests in NGHC, JIGPC, and World Energy are further discussed below.
NGHC Joint Venture
The NEOM Green Hydrogen Project (the "NEOM project”) is a multi-billion dollar green hydrogen-based ammonia production facility that is being constructed in NEOM City, Saudi Arabia. Owned and operated by NGHC, the facility will be powered by renewable energy to produce green ammonia for Air Products as the exclusive offtaker under a long-term take-if-tendered agreement. We intend to transport the green ammonia around the world to be dissociated to produce green hydrogen for transportation and industrial markets.
In May 2023, NGHC finalized the $6.7 billion engineering, procurement, and construction ("EPC") agreement with Air Products named as the main contractor and system integrator for the facility. NGHC secured non-recourse project financing of approximately $6.1 billion, which is expected to fund about 73% of the project and will be drawn over the construction period. At the same time, NGHC secured additional non-recourse credit facilities totaling approximately $500 primarily for working capital needs. Under the financing, the assets of NGHC can only be used to settle obligations of the joint venture, and creditors of NGHC do not have recourse to the general credit of Air Products. Borrowings under the financing are reflected net of unamortized discounts and debt issuance costs within "Long-term debt" on our consolidated balance sheets. Principal borrowings totaled $2,129.4 and $1,364.8 as of 31 December 2023 and 30 September 2023, respectively. The increase from 30 September 2023 primarily relates to principal borrowings of approximately $620 as of 31 December 2023 on a 2.00% fixed-rate Saudi Riyal loan facility that matures in November 2040.
Air Products is an equal owner in NGHC with our joint venture partners, ACWA Power and NEOM Company. While we only hold one-third of the voting interests in the joint venture, substantially all the activities of the joint venture involve or are conducted on behalf of Air Products. Since we have disproportionately few voting rights relative to our economic interests in the joint venture, we determined that NGHC is a VIE. In addition, we determined that we are the primary beneficiary of NGHC since we have the power to unilaterally direct certain significant activities, including key design and construction decisions, and we share power with our joint venture partners related to other activities that are significant to the economic performance of NGHC. Therefore, we consolidate NGHC within the Middle East and India segment.
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The table below summarizes balances associated with NGHC as reflected on our consolidated balance sheets:
31 December30 September
20232023
Assets
Cash and cash items$402.3 $78.2 
Trade receivables, net14.6  
Prepaid expenses30.5 21.4 
Other receivables and current assets183.3 181.6 
Total current assets$630.7 $281.2 
Plant and equipment, net1,831.6 1,396.1 
Operating lease right-of-use assets, net227.7 228.9 
Other noncurrent assets61.8 350.6 
Total noncurrent assets$2,121.1 $1,975.6 
Total assets$2,751.8 $2,256.8 
Liabilities
Payables and accrued liabilities$207.0 $141.0 
Accrued income taxes2.2 0.6 
Total current liabilities$209.2 $141.6 
Long-term debt1,930.4 1,274.4 
Noncurrent operating lease liabilities19.2 18.9 
Other noncurrent liabilities3.3 2.1 
Deferred income taxes4.0 24.1 
Total noncurrent liabilities$1,956.9 $1,319.5 
Total liabilities$2,166.1 $1,461.1 
Equity
Accumulated other comprehensive income$15.8 $77.7 
Noncontrolling interests580.1 723.6 

JIGPC Joint Venture
JIGPC is a joint venture with Saudi Aramco Power Company (a subsidiary of Aramco), ACWA Power, and Air Products Qudra (“APQ”). JIGPC entered into project financing to purchase power blocks, gasifiers, air separation units, syngas cleanup assets, and utilities to supply electricity, steam, hydrogen, and utilities to Aramco’s refinery and terminal complex under a 25-year agreement, which commenced in the first quarter of fiscal year 2022. JIGPC recorded financing receivables upon acquisition of the assets and recognizes financing income over the supply term.
We determined JIGPC is a VIE for which we exercise significant influence but are not the primary beneficiary as we do not have the power to direct the activities that are most significant to its economic performance. Instead, these activities, including plant dispatch, operating and maintenance decisions, budgeting, capital expenditures, and financing, require unanimous approval of the owners or are controlled by the customer. Accordingly, we account for our 55% investment, which includes 4% that is attributable to the noncontrolling partner of APQ, under the equity method within the Middle East and India segment. The carrying value of our investment, including amounts attributable to noncontrolling interests, totaled $2,828.3 and $2,862.2 as of 31 December 2023 and 30 September 2023, respectively. Our loss exposure is limited to our investment in the joint venture.
Our investment primarily consists of shareholder loans that qualify as in-substance common stock in the joint venture. Certain shareholders receive a preferred cash distribution pursuant to the joint venture agreement, which specifies each shareholder’s share of income after considering the amount of cash available for distribution. As such, the earnings attributable to Air Products may not be proportionate to our ownership interest in the venture.
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World Energy
In November 2023, we finalized an agreement to purchase a sustainable aviation fuel (“SAF”) facility in Paramount, California from World Energy. We determined the acquisition contains an embedded sales-type lease. As a result, we are accounting for the transaction as a financing arrangement and recorded a financing receivable of $210 as of 31 December 2023. We provided the remaining $90 million of financing available under this arrangement to World Energy in January 2024.
At the time of acquisition, we entered into a Master Project Agreement (“MPA”) containing terms for operation of the acquired facility as well as amended terms for the construction and operation of an SAF expansion project subject to construction at the same location. The MPA includes a tolling arrangement whereby we will receive feedstock from and produce renewable fuels for World Energy over a term that will conclude 15 years after onstream of the expansion project with the option to renew for two five-year terms.
During the first quarter of fiscal year 2024, we determined that World Energy is a VIE and our financing receivable represents a variable interest in World Energy. We are not the primary beneficiary as we do not have control over their key operating decisions, including feedstock supply, production of renewable fuels, and negotiating and executing supply agreements with customers. As of 31 December 2023, our maximum exposure to loss is approximately $1.9 billion. This includes project-related spending of $1.3 billion that is primarily capitalized within “Plant and equipment, net” and approximately $350 for open purchase commitments, both of which relate to the SAF expansion project, as well as $300 for our investment in the financing receivables discussed above.
4. REVENUE RECOGNITION
The majority of our revenue is generated from our sale of gas customers within the regional industrial gases segments. We distribute gases through either our on-site or merchant supply mode depending on various factors, including the customer's volume requirements and location. We also design and manufacture equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage. The Corporate and other segment serves our sale of equipment customers.
Disaggregation of Revenue
The tables below present our consolidated sales disaggregated by supply mode for each of our reportable segments for the first three months of fiscal years 2024 and 2023. We believe this presentation best depicts the nature, timing, type of customer, and contract terms for our sales.
Three Months Ended 31 December 2023
AmericasAsiaEuropeMiddle East
 and India
Corporate
and other
Total%
On-site$714.1 $503.2 $259.2 $17.5 $ $1,494.0 50 %
Merchant538.0 290.6 472.0 17.9  1,318.5 44 %
Sale of equipment    184.9 184.9 6 %
Total $1,252.1 $793.8 $731.2 $35.4 $184.9 $2,997.4 100 %
Three Months Ended 31 December 2022
AmericasAsiaEuropeMiddle East
 and India
Corporate
and other
Total%
On-site$845.8 $457.7 $328.1 $18.8 $ $1,650.4 52 %
Merchant538.4 320.1 463.8 22.6  1,344.9 42 %
Sale of equipment    179.4 179.4 6 %
Total $1,384.2 $777.8 $791.9 $41.4 $179.4 $3,174.7 100 %
Interest income associated with financing and lease arrangements accounted for approximately 1% of our total consolidated sales during the three months ended 31 December 2023.
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Remaining Performance Obligations
As of 31 December 2023, the transaction price allocated to remaining performance obligations is estimated to be approximately $27 billion. This amount includes fixed-charge contract provisions associated with our on-site and sale of equipment supply modes. We estimate that approximately half of this revenue will be recognized over the next five years and the balance thereafter.
Our remaining performance obligations do not include (1) expected revenue associated with new on-site plants that are not yet on-stream; (2) consideration associated with contracts that have an expected duration of less than one year; and (3) variable consideration for which we recognize revenue at the amount to which we have the right to invoice, including energy cost pass-through to customers.
In the future, actual amounts will differ due to events outside of our control, including, but not limited to, inflationary price escalations; currency exchange rates; and amended, terminated, or renewed contracts.
Contract Balances
The table below details balances arising from contracts with customers:
31 December30 September
Balance Sheet Location20232023
Assets
Contract assets – currentOther receivables and current assets$119.3 $124.7 
Contract fulfillment costs – currentOther receivables and current assets96.2 89.0 
Liabilities
Contract liabilities – currentPayables and accrued liabilities$386.0 $413.0 
Contract liabilities – noncurrentOther noncurrent liabilities130.7 136.9 
During the first three months of fiscal year 2024, we recognized sales of approximately $115 associated with sale of equipment contracts that were included within our current contract liabilities as of 30 September 2023.
5. INVENTORIES
The components of inventories are as follows:
31 December30 September
20232023
Finished goods$229.4 $211.6 
Work in process32.3 28.4 
Raw materials, supplies, and other447.6 411.8 
Inventories$709.3 $651.8 

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6. GOODWILL
Changes to the carrying amount of consolidated goodwill by segment for the three months ended 31 December 2023 are as follows:
AmericasAsiaEuropeMiddle East and IndiaCorporate and otherTotal
Goodwill, net as of 30 September 2023
$146.6 $171.9 $493.5 $15.8 $33.9 $861.7 
Currency translation
0.6 3.4 33.5  0.2 37.7 
Goodwill, net as of 31 December 2023
$147.2 $175.3 $527.0 $15.8 $34.1 $899.4 

31 December30 September
20232023
Goodwill, gross$1,200.2 $1,158.4 
Accumulated impairment losses(A)
(300.8)(296.7)
Goodwill, net$899.4 $861.7 
(A)We recorded impairment charges related to the Latin America reporting unit ("LASA") in the Americas segment in fiscal years 2017 and 2014. The balance of accumulated impairment losses fluctuates over time due to currency translation.
We review goodwill for impairment annually in the fourth quarter of the fiscal year and whenever events or changes in circumstances indicate that the carrying value of goodwill might not be recoverable.
7. FINANCIAL INSTRUMENTS
Currency Price Risk Management
Our earnings, cash flows, and financial position are exposed to foreign currency risk from foreign currency-denominated transactions and net investments in foreign operations. It is our policy to seek to minimize our cash flow volatility from changes in currency exchange rates. This is accomplished by identifying and evaluating the risk that our cash flows will change in value due to changes in exchange rates and by executing strategies necessary to manage such exposures. Our objective is to maintain economically balanced currency risk management strategies that provide adequate downside protection.
Forward Exchange Contracts
We enter into forward exchange contracts to reduce the cash flow exposure to foreign currency fluctuations associated with highly anticipated cash flows and certain firm commitments, such as the purchase of plant and equipment. We also enter into forward exchange contracts to hedge the cash flow exposure on intercompany loans and third-party debt. This portfolio of forward exchange contracts consists primarily of Euros and U.S. Dollars. The maximum remaining term of any forward exchange contract currently outstanding and designated as a cash flow hedge at 31 December 2023 is 2.9 years.
Forward exchange contracts are also used to hedge the value of investments in certain foreign subsidiaries and affiliates by creating a liability in a currency in which we have a net equity position. The primary currency pair in this portfolio of forward exchange contracts is Euros and U.S. Dollars.
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We also utilize forward exchange contracts that are not designated as hedges. These contracts are used to economically hedge foreign currency-denominated monetary assets and liabilities, primarily working capital. The primary objective of these forward exchange contracts is to protect the value of foreign currency-denominated monetary assets and liabilities from the effects of volatility in foreign exchange rates that might occur prior to their receipt or settlement. This portfolio of forward exchange contracts consists of multiple foreign currency pairs, with a profile that changes from time to time depending on our business activity and sourcing decisions.
The table below summarizes our outstanding currency price risk management instruments:
31 December 202330 September 2023
US$
Notional
Years
Average
Maturity
US$
Notional
Years
Average
Maturity
Forward Exchange Contracts:
Cash flow hedges$4,658.6 0.6$4,463.2 0.7
Net investment hedges898.5 2.3864.0 2.5
Not designated585.1 0.3709.4 0.3
Total Forward Exchange Contracts$6,142.2 0.8$6,036.6 0.9
We also use foreign currency-denominated debt to hedge the foreign currency exposures of our net investment in certain foreign subsidiaries. The designated foreign currency-denominated debt and related accrued interest was €1,930.7 million ($2,131.3) at 31 December 2023 and €1,938.6 million ($2,049.7) at 30 September 2023. The designated foreign currency-denominated debt is presented within "Long-term debt" on the consolidated balance sheets.
Debt Portfolio Management
It is our policy to identify, on a continuing basis, the need for debt capital and to evaluate the financial risks inherent in funding the Company with debt capital. Reflecting the result of this ongoing review, we manage our debt portfolio and hedging program with the intent to (1) reduce funding risk with respect to borrowings made by us to preserve our access to debt capital and provide debt capital as required for funding and liquidity purposes, and (2) manage the aggregate interest rate risk and the debt portfolio in accordance with certain debt management parameters.
Interest Rate Management Contracts
We enter into interest rate swaps to change the fixed/variable interest rate mix of our debt portfolio in order to maintain the percentage of fixed- and variable-rate debt within the parameters set by management. In accordance with these parameters, the agreements are used to manage interest rate risks and costs inherent in our debt portfolio. Our interest rate management portfolio generally consists of fixed-to-floating interest rate swaps (which are designated as fair value hedges), pre-issuance interest rate swaps and treasury locks (which hedge the interest rate risk associated with anticipated fixed-rate debt issuances and are designated as cash flow hedges), and floating-to-fixed interest rate swaps (which are designated as cash flow hedges). As of 31 December 2023, the outstanding interest rate swaps were denominated in U.S. Dollars. The notional amount of the interest rate swap agreements is equal to or less than the designated debt being hedged. When interest rate swaps are used to hedge variable-rate debt, the indices of the swaps and the debt to which they are designated are the same. It is our policy not to enter into any interest rate management contracts which lever a move in interest rates on a greater than one-to-one basis.
Cross Currency Interest Rate Swap Contracts
We enter into cross currency interest rate swap contracts when our risk management function deems necessary. These contracts may entail both the exchange of fixed- and floating-rate interest payments periodically over the life of the agreement and the exchange of one currency for another currency at inception and at a specified future date. The contracts are used to hedge either certain net investments in foreign operations or non-functional currency cash flows related to intercompany loans. The current cross currency interest rate swap portfolio consists of fixed-to-fixed swaps primarily between the U.S. Dollar and each of the Chinese Renminbi, Indian Rupee, and Chilean Peso.
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The table below summarizes our outstanding interest rate management contracts and cross currency interest rate swaps:
31 December 202330 September 2023
US$
Notional
Average
Pay %
Average
Receive
%
Years
Average
Maturity
US$
Notional
Average
Pay %
Average
Receive
%
Years
Average
Maturity
Interest rate swaps
(fair value hedge)
$800.0 SOFR1.64 %3.7$800.0 SOFR1.64 %4.0
Interest rate swaps
(cash flow hedge)
$1,371.4 2.82 %SOFR21.9$1,182.5 2.82 %SOFR22.1
Cross currency interest rate swaps
(net investment hedge)
$37.3 3.67 %3.69 %0.5$80.8 4.60 %3.65 %0.9
Cross currency interest rate swaps
(cash flow hedge)
$569.2 4.95 %3.23 %2.0$598.2 4.89 %3.22 %2.2
Cross currency interest rate swaps
(not designated)
$36.6 5.39 %3.64 %1.0$44.5 5.39 %3.54 %0.2
The table below provides the amounts recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges:
Carrying amounts of hedged itemCumulative hedging adjustment, included in carrying amount
31 December30 September31 December30 September
Balance Sheet Location2023202320232023
Long-term debt$2,037.9 $2,011.4 ($54.4)($80.5)
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The table below summarizes the fair value and balance sheet location of our outstanding derivatives:
Balance Sheet31 December30 SeptemberBalance Sheet31 December30 September
Location20232023Location20232023
Derivatives Designated as Hedging Instruments:
Forward exchange contractsOther receivables and current assets$61.1 $50.2 Payables and accrued liabilities$37.2 $94.1 
Interest rate management contractsOther receivables and current assets7.9 13.0 Payables and accrued liabilities0.2  
Forward exchange contractsOther noncurrent assets13.9 19.8 Other noncurrent liabilities19.2 25.7 
Interest rate management contractsOther noncurrent assets65.3 300.8 Other noncurrent liabilities60.1 87.0 
Total Derivatives Designated as Hedging Instruments$148.2 $383.8 $116.7 $206.8 
Derivatives Not Designated as Hedging Instruments:
Forward exchange contractsOther receivables and current assets$3.7 $6.4 Payables and accrued liabilities$5.5 $4.6 
Interest rate management contractsOther receivables and current assets1.2 3.9 Payables and accrued liabilities  
Forward exchange contractsOther noncurrent assets0.1  Other noncurrent liabilities0.1  
Total Derivatives Not Designated as Hedging Instruments$5.0 $10.3 $5.6 $4.6 
Total Derivatives$153.2 $394.1 $122.3 $211.4 
Refer to Note 8, Fair Value Measurements, which defines fair value, describes the method for measuring fair value, and provides additional disclosures regarding fair value measurements.
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The tables below summarize gains (losses) recognized in other comprehensive income during the period related to our net investment and cash flow hedging relationships:
Three Months Ended
31 December
20232022
Net Investment Hedging Relationships
Forward exchange contracts($31.8)($47.1)
Foreign currency debt(89.9)(115.3)
Cross currency interest rate swaps(1.9)(10.6)
Total Amount Recognized in OCI(123.6)(173.0)
Tax effects30.1 42.5 
Net Amount Recognized in OCI($93.5)($130.5)
Three Months Ended
31 December
20232022
Derivatives in Cash Flow Hedging Relationships
Forward exchange contracts$115.1 $188.8 
Forward exchange contracts, excluded components(9.0)(5.6)
Other(A)
(261.7)(24.0)
Total Amount Recognized in OCI(155.6)159.2 
Tax effects(5.5)(38.2)
Net Amount Recognized in OCI($161.1)$121.0 
(A)Other primarily includes interest rate and cross currency interest rate swaps for which excluded components are recognized in “Payables and accrued liabilities” and “Other receivables and current assets” as a component of accrued interest payable and accrued interest receivable, respectively. These excluded components are recorded in “Other non-operating income (expense), net” over the life of the cross currency interest rate swap. Other also includes the recognition of our share of gains and losses, net of tax, related to interest rate swaps held by our equity affiliates.
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The table below summarizes the location and amounts recognized in income related to our cash flow and fair value hedging relationships by contract type:
Three Months Ended 31 December
SalesCost of SalesInterest ExpenseOther Non-Operating Income (Expense), Net
20232022202320222023202220232022
Total presented in consolidated income statements that includes effects of hedging below$2,997.4 $3,174.7 $2,067.2 $2,272.3 $53.5 $41.2 ($14.8)($0.6)
(Gain) Loss Effects of Cash Flow Hedging:
Forward Exchange Contracts:
Amount reclassified from OCI into income$0.3 $ $1.3 $1.2 $ $ ($74.9)($117.8)
Amount excluded from effectiveness testing recognized in earnings based on amortization approach      5.7 2.0 
Other:
Amount reclassified from OCI into income    1.3 1.5 11.3 22.7 
Total (Gain) Loss Reclassified from OCI to Income0.3  1.3 1.2 1.3 1.5 (57.9)(93.1)
Tax effects(0.1) (0.3)(0.2)(0.5)(0.5)13.7 22.4 
Net (Gain) Loss Reclassified from OCI to Income$0.2 $ $1.0 $1.0 $0.8 $1.0 ($44.2)($70.7)
(Gain) Loss Effects of Fair Value Hedging:
Other:
Hedged items$ $ $ $ $26.1 $4.4 $ $ 
Derivatives designated as hedging instruments    (26.1)(4.4)  
Total (Gain) Loss Recognized in Income$ $ $ $ $ $ $ $ 
The tables below summarize the location and amounts recognized in income related to our derivatives not designated as hedging instruments by contract type:
Three Months Ended 31 December
Other Income (Expense), NetOther Non-Operating Income (Expense), Net
2023202220232022
The Effects of Derivatives Not Designated as Hedging Instruments:
Forward Exchange Contracts$3.2 $0.6 ($1.2)($1.6)
Other  0.8 1.1 
Total (Gain) Loss Recognized in Income$3.2 $0.6 ($0.4)($0.5)
The amount of unrealized gains and losses related to cash flow hedges as of 31 December 2023 that are expected to be reclassified to earnings in the next twelve months is not material.
The cash flows related to derivative contracts are generally reported in the operating activities section of the consolidated statements of cash flows.
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Credit Risk-Related Contingent Features
Certain derivative instruments are executed under agreements that require us to maintain a minimum credit rating with both Standard & Poor’s and Moody’s. If our credit rating falls below this threshold, the counterparty to the derivative instruments has the right to request full collateralization on the derivatives’ net liability position. The net liability position of derivatives with credit risk-related contingent features was $69.6 and $94.2 as of 31 December 2023 and 30 September 2023, respectively. Because our current credit rating is above the various pre-established thresholds, no collateral has been posted on these liability positions.
Counterparty Credit Risk Management
We execute financial derivative transactions with counterparties that are highly rated financial institutions, all of which are investment grade at this time. Some of our underlying derivative agreements give us the right to require the institution to post collateral if its credit rating falls below the pre-established thresholds with Standard & Poor’s, Moody’s, or Fitch. The collateral that the counterparties would be required to post was $107.5 and $345.0 as of 31 December 2023 and 30 September 2023, respectively. No financial institution is required to post collateral at this time, as all have credit ratings at or above threshold.
8. FAIR VALUE MEASUREMENTS
Fair value is defined as an exit price, or the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows:
Level 1    — Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2    — Inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability.
Level 3    — Inputs that are unobservable for the asset or liability based on our own assumptions about the assumptions market participants would use in pricing the asset or liability.
The methods and assumptions used to measure the fair value of financial instruments are as follows:
Short-term Investments
Short-term investments primarily include time deposits with original maturities greater than three months and less than one year. We estimated the fair value of our short-term investments, which approximates carrying value as of the balance sheet date, using Level 2 inputs within the fair value hierarchy. Level 2 measurements were based on current interest rates for similar investments with comparable credit risk and time to maturity.
Derivatives
The fair value of our interest rate management contracts and forward exchange contracts are quantified using the income approach and are based on estimates using standard pricing models. These models consider the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. These standard pricing models utilize inputs that are derived from or corroborated by observable market data such as interest rate yield curves as well as currency spot and forward rates; therefore, the fair value of our derivatives is classified as a Level 2 measurement. On an ongoing basis, we randomly test a subset of our valuations against valuations received from the transaction’s counterparty to validate the accuracy of our standard pricing models. Counterparties to these derivative contracts are highly rated financial institutions.
Refer to Note 7, Financial Instruments, for a description of derivative instruments, including details related to the balance sheet line classifications.
Long-term Debt, Including Related Party
The fair value of our debt is based on estimates using standard pricing models that consider the value of future cash flows as of the balance sheet date, discounted to a present value using discount factors that match both the time to maturity and currency of the underlying instruments. These standard valuation models utilize observable market data such as interest rate yield curves and currency spot rates; therefore, the fair value of our debt is classified as a Level 2 measurement.
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The carrying values and fair values of financial instruments were as follows:
31 December 202330 September 2023
Carrying ValueFair ValueCarrying ValueFair Value
Assets
Derivatives
Forward exchange contracts$78.8 $78.8 $76.4 $76.4 
Interest rate management contracts74.4 74.4 317.7 317.7 
Liabilities
Derivatives
Forward exchange contracts$62.0 $62.0 $124.4 $124.4 
Interest rate management contracts60.3 60.3 87.0 87.0 
Long-term debt, including current portion and related party12,091.3 11,692.9 10,046.3 9,173.5 
The carrying amounts reported on the consolidated balance sheets for cash and cash items, short-term investments, trade receivables, payables and accrued liabilities, accrued income taxes, and short-term borrowings approximate fair value due to the short-term nature of these instruments. Accordingly, these items have been excluded from the above table.
The table below summarizes assets and liabilities on the consolidated balance sheets that are measured at fair value on a recurring basis:
31 December 202330 September 2023
TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
Assets at Fair Value
Derivatives
Forward exchange contracts$78.8 $ $78.8 $ $76.4 $ $76.4 $ 
Interest rate management contracts74.4  74.4  317.7  317.7  
Total Assets at Fair Value$153.2 $ $153.2 $ $394.1 $ $394.1 $ 
Liabilities at Fair Value
Derivatives
Forward exchange contracts$62.0 $ $62.0 $ $124.4 $ $124.4 $ 
Interest rate management contracts60.3  60.3  87.0  87.0  
Total Liabilities at Fair Value$122.3 $ $122.3 $ $211.4 $ $211.4 $ 

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9. RETIREMENT BENEFITS
The components of net periodic cost for our defined benefit pension plans for the three months ended 31 December 2023 and 2022 were as follows:
Pension Benefits
20232022
Three Months Ended 31 DecemberU.S.InternationalTotalU.S.InternationalTotal
Service cost$2.4 $2.8 $5.2 $2.7 $3.3 $6.0 
Non-service cost:
  Interest cost33.7 14.8 48.5 32.5 14.4 46.9 
  Expected return on plan assets(30.0)(11.6)(41.6)(31.8)(11.8)(43.6)
  Prior service cost amortization0.3 0.2 0.5 0.3  0.3 
  Actuarial loss amortization14.3 3.2 17.5 14.8 3.0 17.8 
  Curtailments    (1.9)(1.9)
Other 0.1 0.1  0.3 0.3 
Net Periodic Cost$20.7 $9.5 $30.2 $18.5 $7.3 $25.8 
Our service costs are primarily included within "Cost of sales" and "Selling and administrative expense" on our consolidated income statements. The amount of service costs capitalized in the first three months of fiscal years 2024 and 2023 were not material. The non-service related impacts are presented outside operating income within "Other non-operating income (expense), net."
For the three months ended 31 December 2023 and 2022, our cash contributions to funded pension plans and benefit payments under unfunded pension plans were $12.0 and $8.0, respectively. Total contributions for fiscal year 2024 are expected to be approximately $